REPORT on remediation progress at RMG

QUARTERLY AGGREGATE REPORT on remediation progress at RMG factories covered by the Accord Statistics as of April 1st, 1 2 3 4 May 8

TABLE OF CONTENT SUMMARY.... 4 INSPECTIONS UPDATE.... 5 INSPECTION REPORTS & CORRECTIVE ACTION PLANS... 6 REVIEW OF FINDINGS.... 6 REMEDIATION PROGRESS.... 10 FACTORIES BEHIND SCHEDULE... 14 COLOPHON... 18 3

SUMMARY 1 Accord article 19c The Accord on Fire and Building Safety in Bangladesh publishes Quarterly Aggregate Reports as part of its commitment to transparency and accountability.¹ This report provides an overview of implementation of the Accord program and remediation progress at the Ready- Made Garment (RMG) factories covered by the Accord. The overall remediation progress rate of safety issues identified in initial inspections reported or verified as fixed has reached 77 percent. Remediation is close to completion at more than 400 Accord factories which have completed more than 90% of the remediation. 61 factories have completed all remediation from initial inspections. While marking this significant progress, major life-threatening safety concerns remain outstanding in too many factories and need to be fixed urgently. These include: inadequately protected fire exits, inadequate fire alarm and fire protection systems, and outstanding structural retrofitting work. The Accord monitors completion of remediation at the 1600+ factories with more than 100 engineers on staff who conduct up to 500 follow-up inspections each month. Each factory covered by the Accord is inspected approximately once every three to four months. The Accord secretariat further conducts targeted remediation review meetings with individual signatory companies to identify high priority factories where remediation must be accelerated. The notice and warning procedure under Article 21 has led to escalation measures at 578 suppliers. When factories reach stage 2 of escalation, the Accord holds meetings with the factory management and the responsible Accord signatory companies to discuss the inadequate remediation; the immediate measures that must be taken, corresponding time lines, and necessary support to make remediation financially feasible. At 71 suppliers, Accord signatory companies were required to terminate business with this supplier s factories for continuing to inadequately participate in the Accord program. The Accord Safety Committee and Safety Training Program has commenced at 480 Accord factories employing more than 1 million workers. At these factories, the Accord has held 317 All Employee Sessions to present the Safety Committee; to inform workers how to identify and address safety hazards; and how to safely evacuate the factory in case of a fire. The Accord Training Team has conducted 827 Safety Committee Training Sessions at factories where the program has commenced. The full 7 session training curriculum has been completed at 49 factories. 4

INSPECTIONS UPDATE 2 http://bangladeshaccord.org/ factories/list-factories/. Key information on each factory on the disclosure list includes: factory name and address, the number of stories of each structure, whether a building includes multiple apparel factories, whether it houses other types of businesses, the number of workers in the factory, and the number of Accord signatories with production at each factory. Under the terms of the Accord, company signatories disclose all their supplier factories in Bangladesh. This information is consolidated into an aggregated list, including information pertinent to assessing building safety. The Accord updates the publicly available factory list on a monthly basis.² Accord signatory companies update their factory data on an ongoing basis submitting it directly to the Fair Factories Clearinghouse (FFC), a secure external platform for sharing and analyzing factory information. All factories covered by the Accord are subject to initial inspections and periodic follow-up inspections to monitor and verify remedial measures. The Accord completed initial fire, electrical and structural inspections of 1100 factories in September 2014. Since then, the Accord has conducted additional batch of 300 newly listed factories in 2015. A third batch of initial inspections commenced in April and are ongoing. DIAGRAM 1: ACCORD INSPECTIONS UPDATE 1524 Accord inspected factories 3 http://bangladeshaccord.org/ factories-transferred-togovernment-inspectionprogram/ 4 This number is higher than the total number of factories listed on the Accord public factory list, because it includes factories that have been closed, and factories transferred to inspection program under the Government of Bangladesh National Tripartite Action Plan for Fire and Building Safety. 4 1923 68 New factories scheduled for inspection 53 Transferred to National Action Plan 3 207 Closed factories (of which 104 relocated) 71 Terminated factories under article 21 5

INSPECTION REPORTS & CORRECTIVE ACTIONS PLANS After each factory has been inspected for fire, electrical and structural safety, the inspection reports are shared with factory owners, the related Accord signatory companies and worker representatives. The factory owner and the company signatories are tasked to develop a Corrective Action Plan (CAP) that details what remedial actions will be taken with a clear timeline and a financial plan. The Accord has a team of case handlers that provide support in the CAP development and implementation and work closely with the Accord engineers to provide any necessary technical guidance. Once a CAP is finalized by the factory owners and the signatory companies it is submitted to the Accord for review and approval by the Chief Safety Inspector. After approval, all three inspection reports and the CAP are uploaded to the Accord database and website. CAPs are regularly updated after the Accord case handlers receive information from the factories reporting that issues have been fixed and after Accord engineers have conducted follow-up inspections. 5 This figure is the number of publically available inspection reports and CAPs on the Accord website. It does not include factories that are closed, transferred to the National Action Plan or terminated. Details on terminated factories can be found here: http:// bangladeshaccord.org/ terminated-suppliers/. DIAGRAM 2: INSPECTION REPORTS AND CAP DEVELOPMENT 5 500 1350 1449 1472 January 2015 January January April REVIEW OF FINDINGS The fire, electrical and structural findings from inspections form the basis of the Corrective Action Plan. Once the CAP is published, the Accord tracks the total number of findings and their status. The numbers presented here therefore represent all reported findings in the 1472 published CAPs. The total number of findings increase for two reasons: 1. New factories continue to be listed by Accord signatories. The Accord conducts initial inspections at these factories and the findings from the initial inspections are added to the total findings as soon as the CAP is published and finalized. 2. Follow up inspections often identify new findings. These are either new hazards that have arisen since initial inspection or hazards which were not checked in the initial inspection which was of limited time and scope due to the urgency to inspect all factories rapidly. 6

The diagrams below show the total original and new findings and as well as all findings combined. DIAGRAM 3: REPORTED FINDINGS (Published CAPs) 59304 62232 43317 34267 34732 41991 43433 32667 33360 33833 25037 27500 19309 20813 19911 20895 20099 8631 9600 902 796 * Total issues based on published CAPs only * 95293 END 2015 122108 01-01- 87538 ORIGINAL 01-01- 34570 NEW 01-01- 126560 01-04- 88664 ORIGINAL 01-04- 37896 NEW 01-04- 6 Please see the Accord s Glossary of Terms for an explanation of the terms used here: http:// bangladeshaccord.org/ wp-content/uploads/ Glossary-of-Terms.pdf 7 Overview of common findings Most of the findings that are reported in published CAPs are common to many factories, such as unsafe means of egress, unsafe electrical installations and weak structures. Lack of fire separations between floors and lack of adequate fire doors are common in almost all factories inspected by the Accord. The most common new inspection findings are electrical safety issues. Most buildings are not constructed in accordance with the structural design drawings. In just over 10% of the factories inspected, this resulted in an immediate requirement to reduce the loads in the building, such as storage, water tanks and other weight. Common safety hazards that need to be remediated include: 6 Lack of certified fire doors in stairwells Inadequate automatic fire alarm systems Inadequate fire separations and protected exits Excess combustible material (fire load) in areas where people are working Loose electrical connections and improper earthing (grounding) systems Accumulation of dust and lint on electrical wiring Inadequate space for electrical installations such as substations Electrical phases that are imbalanced or overloaded Negligence towards electrical systems Lack of lateral stability in the structure Lack of accurate structural drawings Lack of management load plans to avoid excess weight in certain parts of the building

Factories requiring Detailed Engineering Assessments (DEAs) The initial structural inspection is not comprehensive and is limited to what can be observed during a 1-day visual inspection of the building. If the initial inspection indicates potential structural weakness this requires in-depth investigation and therefore many factories are required to undertake a structural Detailed Engineering Assessment (DEA) of all or part of the building. 7 In many cases, the DEA requirement from the initial structural inspection is not for a complete DEA but rather involves further assessment on a finite number of specific items of concern. In such cases, the time for performing the DEA should be accordingly less. DEAs are conducted by a qualified structural engineer hired by the factory. A complete DEA takes around 45 days to conduct⁷ and involves preparing as-built drawings, conducting engineering tests e.g. sampling and testing concrete strength, assessing actual loading, preparing load plans and developing retrofitting drawings. The factory then submits the DEA to the Accord for review. After review, the Accord will advise if further analysis is required for the DEA to be considered. Once the documentation is satisfactorily submitted, the Accord arranges a presentation meeting for the factory s structural engineer to present the findings. In most cases, the presentation generates further questions and the Accord will specify any further requirements for completing the DEA. The process is therefore iterative and usually needs 4 to 6 reviews and presentations before the DEA can be approved for the factory to begin retrofitting work. A challenge at the beginning of this process was for factories to find structural engineers with the necessary experience to conduct DEAs. The Accord prioritizes DEA reviews and presentations for factories identified as having serious structural safety risks. The Accord is observing improvement in the quality of DEA submissions and re-submissions as the factories and engineers are gaining knowledge and experience in this complex technical discipline. However, the number of re-submissions needed before the Accord can approve the DEA is concerning and causing unnecessary delays in the commencement of retrofitting. In order to accelerate structural remediation, the Accord has introduced a number of escalation triggers related to DEA submissions and approvals. The diagram below shows the progress made in DEA submissions and DEA approvals: DIAGRAM 4: DEA STATUS DEAs SUBMITTED by factories and brands for Accord approval DEAs APPROVED by CSI 1279 1095 691 109 554 578 January 1st January 1st April 1st 8

Factories requiring Fire Design & Drawing The Accord fire safety inspections may result in the requirement of the factory to install fire protection systems such as automatic fire alarm systems, automatic sprinkler systems and hydrant systems. The design drawings for these systems must be submitted to the Accord for review and acceptance prior to installation of the system to ensure they meet standard. DIAGRAM 5: FIRE DESIGN & DRAWINGS REQUIRING APPROVAL Fire Alarm designs REVIEWED 1689 APPROVED 1269 Hydrant System designs REVIEWED 1051 APPROVED 1014 Factories submitted to the Review Panel In 39 building structure inspections, the Accord found that the structural integrity of the building fell below the acceptable level of safety and that there was a severe and imminent risk of structural failure. This led the Accord to submit its inspection results to the Government of Bangladesh Review Panel. The Review Panel was established for inspections which lead to determinations that a building evacuation or suspension to operations is required. In order to overturn the initial evacuation recommendation of the inspection, a unanimous decision of the team of 4 Review Panel engineers (1 Accord, 1 Alliance, 2 Government of Bangladesh/ Bangladesh University for Engineering Technology) must be reached. 8 http://bangladeshaccord.org/ factories/review-panel-cases The Accord has developed a separate webpage on its website that provides more details on the factories submitted to the Review Panel, such as a summary of reasons for submission, information about the current operational status of the factory, and information about the status of employment of the affected workers.⁸ The Accord is working with owners, brands, and labour in these cases in the three critical areas of: expediting remediation, ensuring wages are paid, and verifying employment is maintained. This is very challenging work but the Accord is working to obtain credible and verified information from brands, labour, owners, and through our own efforts to ensure the provisions of the Accord are being upheld. 9

REMEDIATION PROGRESS Diagram 6 provides an overview of the status of inspection findings that are reported in the published CAPs. IN PROGRESS: This is the default status for an inspection finding. It means that remediation of the inspection finding is underway. PENDING VERIFICATION: The Accord has been informed that the finding has been corrected but the Accord is yet to verify this. CORRECTED: The finding has been verified as corrected by the Accord engineers through their follow-up verification visits. The total findings in published CAPs include original findings and new findings. ORIGINAL FINDINGS: Findings from the Accord Initial inspections. NEW FINDINGS: Findings from Accord follow-up inspections. The Accord experience with remediation verification thus far, indicates that around 23 percent of issues pending verification will be reclassified as in progress after a follow-up inspection. This is attributed to discovering during an Accord follow up inspection that the issue was either not corrected or inadequately corrected. The Accord uses an average progress rate metric to monitor remediation progress fairly across all factories. The metric is the percentage of original issues reported and verified as fixed out of the total number of original issues. The Accord average initial CAP progress rate (percentage of issues pending verification and corrected) stands at 77%. TABLE 1: STATUS OF ORIGINAL FINDINGS (In published CAPs) ORIGINAL ISSUES IN PROGRESS ORIGINAL ISSUES PENDING VERIFICATION ORIGINAL ISSUES CORRECTED ORIGINAL PROGRESS RATE ELECTRICAL 3975 2103 28654 34732 88,6% FIRE 9588 2692 33833 33833 71,7% STRUCTURAL 8475 4385 20099 20099 57,8% 22038 9180 57446 88664 TABLE 2: STATUS OF NEW FINDINGS (In published CAPs) NEW ISSUES IN PROGRESS NEW ISSUES PENDING VERIFICATION NEW ISSUES CORRECTED NEW PROGRESS RATE ELECTRICAL 6445 2621 18434 27500 76,6% FIRE 3403 1067 5130 9600 64,6% STRUCTURAL 417 200 179 796 47,6% 10265 3888 23488 37896 10

DIAGRAM 6: STATUS OF ORIGINAL AND NEW FIRE, ELECTRICAL AND STRUCTURAL FINDINGS COMBINED 65000 IN PROGRESS PENDING VERIFICATION CORRECTED 60000 55000 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 18037 6128 26921 14384 6750 33282 11758 7150 38087 10623 6085 42596 10420 4720 47088 51086 54416 56995 59304 62232 31-03 30-06 01-10 15-01 01-04 65000 60000 55000 50000 45000 40000 35000 19802 16711 15086 13560 12991 30000 25000 20000 15000 10000 4824 12832 5727 16744 5896 19800 5272 23159 3759 26783 5000 0 37458 31-03 39182 30-06 40782 01-10 41991 43433 15-01 01-04 65000 60000 55000 50000 45000 40000 35000 30000 25000 20000 15000 12596 12277 11242 9975 7418 10000 5000 0 4300 3098 4203 3908 4447 5028 4608 4585 6230 8892 11 19994 31-03 20388 20717 30-06 01-10 20813 15-01 20895 01-04

Follow-up inspections The Accord engineers are monitoring progress and verifying implementation of CAPs. Accord engineers are conducting follow up inspections to verify that corrective actions have been completed correctly. In addition to the teams undertaking follow-up fire, electrical and structural inspections to verify CAP implementation, one team of structural engineers inspects factories with major structural concerns which required immediate attention. The reasons for the structural follow-up inspections are to verify whether or not required immediate actions were taken, to verify the information provided in the DEA is correct, and to verify retrofitting works. The Accord is also conducting special inspections in response to safety complaints and fire incident investigations. In late 2015 and early, the Accord increased the number of staff engineers to be able to conduct a target of 500 follow-up inspections per month. This means each factory covered by the Accord will be inspected approximately once every three months. After the Accord engineers have undertaken a follow-up inspection, they generate a detailed report and update the CAPs. The detailed report is sent to the factory, related company signatories and union signatories. This report includes an explanation of any new findings and pictorial evidence of remediation. The updated CAP is published on the Accord website and shows the progress status of each finding and includes any new findings. TABLE 3: ACCORD FOLLOW-UP INSPECTIONS FOLLOW-UP INSPECTIONS October 1 st January 1 st April 1 st (COMBINED) 5017 6332 7539 SPECIAL INSPECTION 306 Escalations due to failure to implement workplace safety measures Suppliers failing to participate in the Accord program will go through an escalation procedure implemented by the Accord and signatory companies. This procedure consists of three stages: (1) A notification of non-compliance from the Accord; (2) Notice and warning from signatory companies and (3) Termination of business by signatory companies. The Accord notice and warning procedure under Article 21 has led to escalation measures at 578 suppliers. If no action is taken following the first warning or the Accord does not see adequate progress, the supplier will be escalated to stage 2 of escalation and the signatory companies in the factory will be required to issue a warning letter to the supplier. At this stage, the Accord holds meetings with the factory management and the responsible Accord signatory companies to discuss the inadequate remediation; the immediate measures that must be taken, corresponding time lines, and necessary support to make remediation financially feasible. 9 http://bangladeshaccord.org/ terminated-suppliers-2/ If the factory meets all the requirements within the specific timelines of the non-compliance notifications, the factory will be de-escalated. At 71 suppliers, Accord signatory companies were required to terminate business with all of this supplier s factories for continuing to inadequately participate in the Accord program. Suppliers whose business with Accord signatory companies has been terminated for reasons of workplace safety are listed on the Accord website.⁹ 12

TABLE 4: ARTICLE 21 ESCALATIONS Factories in stage 1 183 Factories in stage 2 132 Factories terminated (stage 3) 71 Factories de-escalated 192 578 Factory remediation status The Accord evaluates the status of each CAP to allow for factory by factory monitoring. The table below shows the totals for each factory status of all factories covered by the Accord. Accord engineers have verified the successful completion of all remediation requirements stemming from the initial inspections at 54 Accord listed factories and 7 factories have completed all the remediation. The factories that either have a status of CAP not finalised or no CAP include: factories with an incomplete CAP (i.e. missing one or more timelines for corrective actions); newly listed factories that have not yet been inspected; and uncooperative factories yet to submit a CAP to the Accord. TABLE 5: CAP STATUS FACTORY STATUS NUMBER OF FACTORIES EXPLANATION CAP completed 7 All issues identified in the Accord CAP (original and new findings) have been resolved and verified by the Accord engineering team. Initial CAP completed 54 All issues identified in the Accord initial CAP have been resolved and verified by the Accord engineering team. CAP on track 39 The CAP is in implementation and all timelines have so far been met. CAP behind schedule 1360 The CAP is in implementation but some timelines have not been met. CAP not implemented 63 The factory does not agree to implement the CAP and as a result Accord signatories have terminated business with the factory following a notice and warning process. 13 CAP not finalised / no CAP 132 The CAP is either incomplete, absent or not yet approved by the Accord.

FACTORIES BEHIND SCHEDULE The vast majority of factories behind schedule is a cause for concern to the Accord. It must be noted that a CAP is marked behind schedule if just one item has passed the agreed final timeline. Being behind schedule therefore does not necessarily mean that no progress has been made at all. The table below shows the level of progress that factories who are behind schedule have made. TABLE 6: PROGRESS LEVELS OF FACTORIES BEHIND SCHEDULE % of issues fixed (reported and verified combined) >75% 50-75% 25-50% <25% No of factories 791 460 79 30 % of factories 58% 34% 6% 2% These figures show that factories are progressing in their remediation, despite being behind schedule. Some factories are further delayed than others. The extent of remediation delays since the initial inspections is broken down in the table below. TABLE 7: NUMBER OF FACTORIES BEHIND SCHEDULE VS TIME SINCE INITIAL INSPECTION TIME SINCE INITIAL INSPECTION NUMBER OF FACTORIES BEHIND SCHEDULE More than 2 years ago Between 2 years and 1 year ago Less than 1 year ago 1184 103 73 Total factories behind schedule 1360 The Accord remains vigilant in accelerating the pace and level of remediation at the large number of Accord inspected factories where execution of the remediation is inadequate or too far behind schedule Ensuring remediation is financially feasible As both the staff of the Accord and the members of the Steering Committee recognize, the information that has been reported is sometimes inaccurate or incomplete. In some cases, signatory brands and factories are reporting that the factory is self-financing, even though the factory is receiving some form of financial assistance (such as guaranteed order volumes for longer periods, higher volumes, pre-payments to improve cash-flows, price increases or direct cash assistance). Signatories have officially reported that assistance is being provided by brands in 58 cases. 14 The Accord acknowledges there may be under-reporting of financial support from signatory companies and as a result it is unclear to the Accord how many suppliers are actually receiving assistance and what forms of assistance are being received. Both labour and brand representatives on the Steering Committee agree that more assistance is likely being provided than is reflected in the official reporting. The question of whether and to what extent factories need financial assistance but are not receiving it, and whether that is a major cause for delays in remediation, is assessed differently by the labour and company side in the SC.

The Accord Secretariat continues its efforts to obtain more accurate data on financing remediation on an aggregated level for public purposes and provide public updates concerning these efforts. Safety Committee and Safety Training Program The Accord trains and supports joint labour-management Safety Committees at factories producing for Accord signatory companies. Functioning safety committees are key to making sure the aims of the Accord continue to be realised after the five year agreement and for the long term. Building these committees and making them effective in addressing and monitoring safety and health issues on a day-to-day basis is a central focus of the Accord training efforts. The Accord Safety Committee and Safety Training Program consists of the following key components: Initial Meeting with factory management and signatories All Employee safety informational sessions 7 Session Safety Committee Training Curriculum Ongoing support for effective functioning of Safety Committees The full 7 Session Safety Committee Training Curriculum has been delivered at 49 factories and at 21 factories the Accord Trainer has returned following the end of the training program to attend the operating Safety Committees. TABLE 8: SUMMARY SAFETY COMMITTEE AND SAFETY TRAINING PROGRAM PROGRESS UP TO 1 ST APRIL Initial Meetings with Factory Management All Employee Meetings Number of Safety Committees Established Total number of Safety Committee Training Sessions Factories completing full Safety Committee training curriculum 315 317 233 827 49 Total Number of Workers Covered 1,009871 Safety and Health Complaints Mechanism The Accord has a safety and health complaints mechanism to remedy safety concerns which are not being effectively addressed at the factory level. Workers and employees at Accord signatory producing factories can raise concerns about health and safety risks safely, and if they choose so, confidentially, with the Accord. The complaint mechanism ensures that safety and health concerns at the factories are properly addressed and remediated, and that the right to refuse unsafe work is upheld where necessary. 15

TABLE 9: STATUS OF COMPLAINTS RECEIVED UNDER THE ACCORD COMPLAINT MECHANISM Initial assessment Under investigation Resolved Non-OSH (outside Accord scope) Unresolved (factory closure, ongoing labour dispute) Withdrawn/resolved outside Accord mechanism 5 12 94 48 22 9 Total complaints received under Accord mechanism 190 16

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COLOPHON TITLE DATE AUTHOR GRAPHIC DESIGN Quarterly Aggregate Report - on remediation progress at RGM factories covered by the Accord May 9, Bangladesh Accord Secretariat JUSTAR.NL Title: Date : Author: BANGLADESH ACCORD FOUNDATION Level 13, AJ Heights, Cha 72/1/d, Pragati Sarani North Badda, Dhaka - 1212 Bangladesh Tel +88 02 9852093-6 +8801766695900 Keizersgracht 62-64 1015 CS Amsterdam The Netherlands Tel +31 (0) 20 520 7431 contact@bangladeshaccord.com www.bangladeshaccord.org 18

ACCORD FOR A SAFE READY-MADE GARMENT INDUSTRY IN BANGLADESH